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contrast, pictures taken at the same time in the older home show
that petitioners’ furniture and household goods were still
located in the original building. Consequently, we must conclude
that the new structure was simply not ready for residential
occupancy and was not occupied before the expiration of the
statutory period.
Hence, the attempts of petitioners to comply with the
statute, like those of the taxpayers in Elam, Sheahan, and
Bayley, cannot be said to rise above the level of token use. The
general incompleteness; the lack of major furniture, appliances,
and amenities; and the failure to sleep in the structure cannot
be overcome by petitioners’ minimal or workshop use of the
structure. Thus, since petitioners simply have not placed the
new structure into use as part of their residence, a denial of
nonrecognition treatment is required.
We therefore hold that petitioners are not entitled to defer
recognition under section 1034 of gain on the sale of their
principal residence. Respondent’s determination of a deficiency
with respect to petitioners’ 1991 taxable year is sustained.
To reflect the foregoing,
Decision will be entered
for respondent.
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Last modified: May 25, 2011